Federal funding change could put $200 million hole in state budget - WSFA.com Montgomery Alabama news.

Federal funding change could put $200 million hole in state budget

Posted by: Melissa McKinney - bio | email

MONTGOMERY, AL (WSFA) - "We're totally dependent on that to be able to balance the budget," says House General Fund Committee Chairman John Knight.

Knight says Alabama's banking on $197 million dollars from Congress.

"There's no question that we recognized at the time that it is a gamble because we're depending on the federal government to pass something in the federal level," he says.

Alabama legislators passed the state's 2011 budget on the basis that Congress would continue supplying Medicaid dollars originally granted through the stimulus package.

Dozens of other states did, too.

But now Washington officials are questioning whether handing out more money is a good idea given the increasing national deficit.

And that means Alabama could be in trouble.

"Everything that's funded that's not education related would be on the chopping block."

Knight says the loss of an expected $197 million could mean cuts in public safety and state services.

"There's not enough fat in the budget. There's not enough programs that could be cut to generate this type of savings. It's going to mean a reduction in services that people depend on each and everyday," says Knight.

A spokesperson for Governor Bob Riley's office responded saying:

"If Congress does not pass it, the state will make the difficult but necessary adjustments to the budget."

Knight says those decisions should be a team effort.

"It's going to require people coming together, putting aside all of their various differences that you fight over when you have plenty of money and deciding these are our priorities," says Knight.

Knight expects Congress to pass the extension within the next month.

But if they don't, he thinks any large changes in the budget should go before the people for a vote.

He believes the Medicaid funding is needed to keep from cutting state services despite the nation's growing deficit.

Any cuts would come strictly from the general fund and not the education budget.

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